ECLI:NL:RBAMS:2023:2540

Uitspraak

judgment

AMSTERDAM DISTRICT COURT

Netherlands Commercial Court

NCC District Court

Case number: NCC 22/018 (C/13/730389)

Judgment

21 April 2023

Claimant, and defendant in the counterclaim:

DIAMEDICA THERAPEUTICS, INC,

Minneapolis, Minnesota (United States of America)

represented by B.F.H. Rumora-Scheltema, lawyer,

Defendant, and claimant in the counterclaim:

PHARMACEUTICAL RESEARCH ASSOCIATES GROUP B.V.,

Groningen (the Netherlands),

represented by A. Attaïbi, lawyer.

The parties are referred to as DiaMedica and PRA. They are jointly referred to as the ‘Parties’. The term ‘lawyer’ has the meaning as defined in Article 3.1.1 NCC Rules of Civil Procedure (NCCR).

1.Procedural history

1.1.

DiaMedica submitted a writ of summons (
dagvaarding), with exhibits, dated 13 November 2020, setting out its claims against PRA and its US-based parent company, PRA Health Sciences, Inc. (PRA U.S.) to the Civil Section of the District Court of the Northern Netherlands.

1.2.

On 17 March 2021, PRA, acting on behalf of the Parties, requested the District Court of the Northern Netherlands to refer the case to the Netherlands Commercial Court chamber of the Amsterdam District Court (NCC District Court).

1.3.

By judgment dated 19 May 2021, the District Court of the Northern Netherlands referred the case to this Court.

1.4.

On 15 December 2022, DiaMedica gave notice to PRA and PRA U.S. of the continuation of the proceedings before the NCC District Court and of an amendment of claim. The next day, DiaMedica submitted documents in eNCC.

1.5.

On 28 December 2022, DiaMedica made a motion for discontinuance of the proceedings against PRA U.S.

1.6.

On 12 January 2023, a case management conference was held via videoconference. The Court granted the motion for discontinuance of the proceedings against PRA U.S. A timetable was set for the next procedural steps.

1.7.

DiaMedica filed a statement substantiating the grounds for its revindication of documents and data claim on 1 February 2023, with exhibits.

1.8.

On 14 February 2023, PRA submitted its statement of defence regarding the revindication claim in the original action, also including a statement of counterclaim, with exhibits.

1.9.

The Parties submitted further exhibits.

1.10.

The Court held a hearing on 17 March 2023. Several persons representing the Parties attended by videoconference. The lawyers of the Parties pleaded their cases, submitted pleading notes and made use of their right to reply and rejoinder. The Court made a record (
proces-verbaal) of this hearing.

1.11.

Subsequently, the judgment date was set for 19 April 2023, but this date was deferred to today.

2.Facts

2.1.

DiaMedica is a biopharmaceutical company. It developed a medicine for the treatment of neurological or kidney disorders, called DM-199.

2.2.

PRA conducts clinical trials regarding the efficacy of newly developed pharmaceutical products. PRA is a part of a larger international organisation, which was merged into ICON plc in 2021.

2.3.

In March 2013, the Parties signed an Agreement for Clinical Trials Management Services (the ‘Agreement’). The relevant provisions of this Agreement are the following:

“(…)

Whereas PRA is engaged in the business of providing services related to the design, management and implementation of clinical development programs for the pharmaceutical, biotechnology and medical device industries; and

Whereas Sponsor [DiaMedica] desires to engage PRA to perform such services in connection with its pharmaceutical product known as DM-199 under development by or under control of Sponsor according to the Protocol titled,
“A Double-Blinded, Placebo-Controlled, Single-Dose and Multiple-Dose Study to Evaluate the Safety, Tolerability, Pharmacokinetics, Pharmacodynamics and Proof of Concept of DM-199 in Healthy Subjects and Patients with Type 2 Diabetes Mellitus”(the “Study”), which is attached hereto and incorporated herein by reference;

(…)

Definitions

(…)

m. Services: The Services to be provided by PRA and its subcontractors (if applicable) under this Agreement as specifically outlined herein.

(…)

Services

PRA, itself or through one of its Affiliates or subcontractors (if applicable), will perform the Services as specified in this Agreement, including all attachments hereto, in accordance with the terms and conditions of this Agreement. (…) All Services to be provided must be set forth in the Agreement and performance of these Services will be authorized in writing through the execution of this Agreement.

Prior to the finalization of this Agreement, PRA and Sponsor entered into the LOI. To the extent that PRA commenced performance of the Services pursuant to the LOI prior to the date of this Agreement, upon execution of this Agreement, the LOI will be automatically integrated into the Agreement and superseded by this Agreement. Any Services performed by PRA under the LOI will be deemed to have been performed under this Agreement. Similarly, any amounts paid by Sponsor under the LOI in compensation for Services, and reimbursement of any pass-through expenses, will be deemed to have been paid under and credited against amounts due under this Agreement.

PRA will perform the Services in conformity with this Agreement and in accordance all applicable laws and regulations, including without limitation those relating to environmental, health, or safety matters.

2.1

Components of this Agreement

(…)

a. Project Specifications. The Project Specifications, attached hereto as Appendix B are incorporated herein by reference and include without limitation, a description of the study protocol, investigator sites, subjects, case record forms (CRFs), reports and Services to be provided by PRA.

(…)

c. Project Schedule.

i. The Project Schedule is attached hereto as Appendix C, which is incorporated herein by reference and includes major project milestones and deadlines for completion of each milestone. The Project Schedule identifies the Study Parts. PRA will not initiate each Study Part until it receives Sponsor’s prior written approval, which approval is in the sole discretion of Sponsor.

(…)

f. Payment Schedule. This Agreement includes a Payment Schedule, which is attached hereto as Appendix E, and is incorporated herein by reference. The Payment Schedule specifies the manner and timing of all payments for Services and pass-through expenses described in this Agreement. Any changes to the Project Specifications, and corresponding changes to the Budget for Services or Pass-Through Budget, will be reflected in a corresponding change in the Payment Schedule, and will become effective only if an Amendment is approved in writing by both Sponsor and PRA.

(…)

2.2

Amendments

Any changes to this Agreement, including but not limited to changes to the Project Specifications, Project Schedule, Budget for Services or Pass-Through Budget, will become effective when agreed upon by the Parties and documented in an Amendment to the Agreement in a form substantially similar to that attached hereto as Appendix A. PRA will not perform any out-of-scope work described in an Amendment until it is approved in writing by both Parties.

A. (…) Such unanticipated changes may include, but are not limited to, any of the following:

(…)

ix. Sponsor requested changes to the Services or protocol;

(…)

3.2

Invoices

a. Invoices for Services and pass-through expenses will be submitted in accordance with the Payment Schedule. Any final payments specified in the Payment Schedule will be invoiced upon completion of the project and delivery to Sponsor of any final study databases, reports or other deliverables as specified in the Project Specifications.

(…)

Ownership of data and intellectual property

All data (including without limitation, written, printed, graphic, video and audio material, and information contained in any computer database or computer readable form) generated by PRA in the course of conducting the Services (the “Data”) and related to the Services will be Sponsor’s property. Any copyrightable work created in connection with performance of the Services and contained in the Data will be considered work made for hire, whether published or unpublished, and all rights therein will be the property of Sponsor as employer, author and owner of copyright in such work.

PRA understands and agrees that the underlying rights to the intellectual property and materials that are the subject of this Agreement, including, without limitation, all intellectual property rights in Sponsor’s drug candidates or products and assays, are owned solely by Sponsor.

(…)

Notwithstanding the foregoing, Sponsor agrees that PRA possesses or may in the future possess analytical methods, computer technical expertise and software, which have been independently developed by PRA and which will remain the sole and exclusive property of PRA, except to the extent that improvements or modifications include, incorporate or are based upon Sponsor’s information. Improvements or enhancements made to PRA’s processes or methods which are independently developed incidental to the provision of Services hereunder will remain the sole property of PRA.

(…)

10.1

Sponsor Confidential Information

a. Sponsor may provide confidential information to PRA during the course of this Agreement. All information provided by Sponsor or data collected by PRA for Sponsor during the performance of the Services is deemed to be the confidential information of Sponsor, and is hereinafter referred to as “Sponsor Information”. PRA will not disclose Sponsor Information to any person other than its employees, agents, and independent contractors involved in the Services or use any such information for any purpose other than the performance of Services without the prior written consent of Sponsor.

(…)

10.2

PRA Confidential Information

Sponsor agrees that all business processes, contract terms, prices procedures, policies, methodologies, systems, computer programs, software, applications, databases, proposals and other documentation generally used by PRA and not developed solely for Sponsor are the exclusive and confidential property of PRA (hereinafter ‘PRA Information”) or the third Parties from whom PRA has secured the right to use. Sponsor agrees that all PRA Information, along with any improvement, alteration or enhancement made thereto during the course of the Services, will be the exclusive proprietary and confidential property of PRA and will be subject to the same degree of protection as is required of PRA to protect the confidential information of Sponsor.

10.3

Return or Destruction of Information.

Upon the written request of the Sponsor, at the termination of this Agreement or at such earlier time as the Sponsor may specify, PRA shall either destroy or return to the Sponsor, as the Sponsor may request in its sole discretion, all copies of the Sponsor Confidential Information. PRA shall use all reasonable efforts to destroy all notes, summaries, analyses and reports made by PRA’s employees, agents and consultants containing such Confidential Information. Provided, however, that PRA shall be entitled to retain in confidence under this Agreement, including without limitation Paragraph 2: (i) one (1) archived copy of Sponsor’s Confidential Information and all materials created by PRA and containing Sponsor’s Confidential Information, including without limitation notes and memoranda, solely for the purpose of administering PRA’s obligations under this Agreement; and (ii) Sponsor’s Confidential information contained in PRA’s electronic back-up files that are created in the normal course of business pursuant to PRA’s standard protocol for preserving its electronic records.

(…)

Governing Law

This Agreement will be governed in all respects by the laws of the State of New York, USA without regard to its conflict of laws principles of any jurisdiction.

(…)”

2.4.

The final version of the protocol referred to in the Agreement (the ‘Protocol’)^[1]reads - insofar as relevant to this case - as follows:

“(…)

3.7

Data Quality Assurance

(…)

Regulatory authorities, the IEC and/or the Sponsor may request access to all source documents, eCRFs, and other study documentation for on-site audit or inspection. Direct access to these documents must be guaranteed by the Investigator [PRA], who must provide support at all times for these activities.

(…)

5.2

Documentation

5.2.1

Archiving

All documents concerning the study will be kept on file in the Central Archives of PRA for at least 15 years after study completion and completion of the Clinical Study Report. The Sponsor will receive the completed eCRFs (upon request, as PDF file).

5.2.2

Recording of Data in Source Documents and eCRFs

Wherever possible, all data will be entered directly into the eCRFs. In some cases source documents will be used.

A Data Management Plan will be written by the Data Management department of PRA, which will be finalised prior to the first dosing. An appendix to the Data Management Plan (Source Identification List) will identify any data to be recorded directly in the eCRF (i.e., no prior written or electronic record of data), and which data should be considered source data.

(…)”

2.5.

In April 2013 PRA started the DM-199 clinical trial. In November 2016, PRA shared a draft clinical study report of the DM-199 trial (the Draft Report) with DiaMedica. To date DiaMedica has declined to approve the Draft Report because – in its view – PRA refused to provide all data necessary to assess the clinical trial.

2.6.

By judgment dated 28 November 2022, the court in summary proceedings of the District Court of the Northern Netherlands granted leave for
inter aliaa prejudgment attachment on all data which are DiaMedica’s property under Article 9.0 of the Agreement, and to transfer these data to a depositary appointed by the court and be held in judicial custody.

2.7.

On 7 December 2022, the bailiff attached copies of the data referred to in the attachment leave (the Attachment), by having 51 hardcopy folders scanned by the custodian and copying certain “digital files”, which were not specified by the bailiff in his official record, to a data carrier, and subsequently surrendered these copies and the data carrier to the judicial custodian.

2.8.

By judgment of 21 December 2022, the court in summary proceedings of the District Court of Amsterdam denied an application to lift the Attachment because DiaMedica’s revindication claim was not shown on summary enquiry to be without merit, nor was the attachment and custody of the data detrimental to PRA.

3.The claims for revindication of documents

3.1.

By the notification referred to under para. 1.4 of this judgment, DiaMedica amended its claim as initiated by writ of summons so that the claims now read that the Court by judgment, enforceable to the extent permitted by law:

orders PRA to pay DiaMedica EUR 75 million in damages, to be increased by applicable interest from the day of default until the day of payment in full;

declares (
verklaart voor recht) that DiaMedica is the rightful owner of the Documents (as defined below in para. 4.2);

orders PRA to allow and tolerate (
gehengen en gedogen) that DiaMedica exercises its rights as owner of the Documents and to cooperate with the surrender of the Documents by the judicial custodian of the Documents to DiaMedica, on pain of an immediately payable penalty of EUR 10,000 to be forfeited by PRA for each violation of this order to be increased by an immediately payable penalty of EUR 10,000 for each day such violation continues;

orders PRA to pay the costs of these proceedings, including the costs of the attachments, to be increased by statutory interest from 14 days, or from a period deemed reasonable by the Court, after the judgment to be rendered, if and to the extent that PRA has not paid these costs before then;

orders PRA to pay the subsequent costs (
nakosten) in the amount of EUR 163, to be increased by statutory interest if and insofar as these costs have not been paid within 14 days of notice and - if the judgment is served - to be further increased by an amount of EUR 85 and the costs of said service, these amounts to be increased by the statutory interest, if and to the extent that PRA has not paid them within (the legally required term of) two days, or within a term deemed reasonable by the Court, after service (or notification) of the judgment to be rendered.

3.2.

At the case management conference, the Court directed - at the request made by DiaMedica, which was supported by PRA - that the Parties first litigate the claims for revindication of documents, which are claims b) through d) above, where claim d) is limited to the costs of the attachment.

4.Discussion

4.1.

The core issues in this phase of the proceedings are:

whether DiaMedica is the owner of the Documents (as defined below in para. 4.2), and

whether PRA may retain the Documents or suspend surrendering the Documents in order to secure payment of its final invoice.

4.2.

In this judgment, the following terms are defined as follows:

Documents: the Physical Documents and Digital Data to be surrendered by PRA pursuant to DiaMedica’s claim;
Digital Data: the digital documents to be surrendered by PRA pursuant to DiaMedica’s claim;
Physical Documents: the physical documents to be surrendered by PRA pursuant to DiaMedica’s claim;
Data: the data as defined in Article 9.0 of the Agreement;
Source Data: the original, raw, and unprocessed data collected or generated by PRA in the course of conducting the clinical trial;
Source Documents: Physical Documents containing Source Data;
Investigator File: a collection of documents pertaining to PRA’s specific study site and the conduct of the trial at that site;
Software: software, which has been independently developed by PRA, except to the extent that improvements or modifications include, incorporate or are based upon the Sponsor’s information.

Jurisdiction and applicable law

4.3.

As this is an international matter, the Court must first assess, on its own initiative, whether it has jurisdiction to hear the case and which law is applicable to the various underlying questions of law.

4.4.

This case was initiated before the District Court of the Northern Netherlands. In its judgment dated 19 May 2021, that court referred the case, pursuant to a request made by all parties, to this Court. This Court is bound by the referral (Article 110 (3) Dutch Code of Civil Procedure; DCCP), and therefore derives its jurisdiction from the referral. The Court also has jurisdiction over the amended claim for revindication of documents, as the defendant is domiciled in the Netherlands.^[2]

4.5.

The applicable law needs to be determined by examining the underlying questions of law. These are the following:

 the interpretation of the Agreement. This question falls within the scope of the Rome I Regulation,^[3]which determines the law applicable to contractual obligations in civil and commercial matters. It applies regardless of whether or not it points to the law of an EU Member State (Article 2). Under Article 3 of the Rome I Regulation a contract is governed by the law chosen by the parties. The parties to the Agreement chose the laws of the State of New York (US) as the applicable law (Article 18.0 of the Agreement). The interpretation of the Agreement is therefore governed by the laws of the State of New York (Article 12(1)(a) Rome I Regulation).

the existence of a right to suspend contractual obligations. Under Article 12 (1)(c) Rome I Regulation this question, which relates to the consequences of an (alleged) breach of contractual obligations, is also governed by the law applicable to the Agreement. In this case: New York State law.
the existence of a property right. This is not a matter of contract but a matter of property law. The Rome I Regulation is not applicable. As there is no treaty or regulation guiding this issue, the rules of Dutch domestic private international law apply. Under Article 10:127(1) of the Dutch Civil Code (DCC) the property law regime relating to things, as a rule, is the law of the state in whose territory the thing is situated (the

 the existence of a right of retention: the creation and contents of a right of retention are determined by the law governing the underlying legal relationship (Article 10:129 DCC), therefore New York State law. However, a right of retention may be enforced only insofar as the law of the state in whose territory the thing is situated so permits (in this case Dutch law).

A) Is DiaMedica the owner of the Documents?

4.6.

There is no dispute that all data generated by PRA in the course of conducting the services (as defined by the Agreement) and related to these services (the Data) are to be, with some noted exceptions, the property of DiaMedica. The Parties agreed so much in Article 9.0 of the Agreement. The Parties’ opinions only differ as to:

whether digital data are subject to a property right under Dutch property law;

whether personal data are subject to a property right under Dutch property law;

which data are within the scope of the definition of Data under the Agreement; and

which party is the owner of the (Physical) Documents at the moment of creation.

i.
i) Are digital data subject to a property right?

4.7.

Dutch law governs the question whether a property right can be created on digital data (see para. 4.5). According to Article 5:1 DCC ownership can only be vested in ‘things’ (
zaken). ‘Things’ are corporeal objects that are subject to human control (Article 3:2 DCC). Although data may be recorded on a hard drive or a data carrier which render them under human control, the current conception of law as described in the legal literature and case law is that digital data as such do not meet the definition of ‘things’:

 “ “There are two objects worth considering for a property approach: data and digital objects. Under current law, it is complicated to place these objects under the concept of property law because of the split in Article 3:1 DCC between “things” and “proprietary rights and interests”. It is evident that data and digital objects are not ‘things’, nor rights, but objects in a digital reality.”^[5]

 “[ “[Several authors] suggested to disregard the word “corporeal” in Article 3:2 DCC, in order for “digital things” to fit under the concept of ‘things’. This is an opinion with far-reaching consequences, which can barely be reconciled with the structure of the DCC.”^[6]

 “ “To the extent appellant’s claim for surrender is founded on its property right, it fails. There is no evidence of violation of property rights belonging to appellant that constitutes a right to surrender, as claimed in these proceedings. There is no argument nor evidence that the DVD, the data carrier, is appellant’s property. Furthermore, there is no evidence that the digital data that are on the DVD (e-mails/documents), which in itself are copies of the e-mails in the original inbox, are subject to surrender (revindication), as claimed by appellant. After all, Article 5:2 DCC is limited to things. There is no argument or evidence that e-mails and documents are things, as things are corporeal objects which can be subject to human control. This is not the case.”^[7]

4.8.

The Court notes that although it may be desirable in this digital day and age to apply the concept of ownership analogously to digital data, this would be contrary to the “closed” system of Dutch property law in which rights are specifically enumerated. It would also encroach on the domain and prerogatives of the legislative branch. As a result, it is not up to the courts to determine the rights in rem that can be vested in digital data.^[8]

4.9.

Therefore, Diamedica’s claim for revindication cannot be awarded, insofar as it concerns the Digital Data.

4.10.

Nevertheless, there still is a valid contractual obligation for PRA to cooperate in DiaMedica becoming the owner of the Digital Data. Article 9.0 of the Agreement clearly states that the data generated by PRA in the course of the clinical trial “will be” Diamedica’s property, including digital data (“information contained in any computer database or computer readable form”). This obligation requires PRA to surrender the Digital Data to DiaMedica in a form that is subject to a property right under Dutch law. By surrendering the data to the bailiff enforcing the leave for attachment, PRA did exactly that. The bailiff’s record shows that he made copies of the digital data which were identified by PRA, saved copies of these digital data to a data carrier and surrendered this data carrier to the custodian. If the copy of the digital data is in this way capable of being surrendered to the bailiff and subsequently to the custodian, it can also be subject to surrender to DiaMedica.

4.11.

This leads to the conclusion that the absence of a Dutch property regime for digital data does not affect PRA’s obligation to cooperate with the surrender of any Digital Data by the judicial custodian to DiaMedica.

ii) Are personal data subject to a property right?

4.12.

Personal data as such are not corporeal objects which can be subject to human control (Article 3:2 DCC). Therefore, under Dutch law they are not subject to a property right. However, where the personal data are a part of a physical object, a property right in that object can exist.

4.13.

This does not imply that all Physical Documents and digital data on the data carrier which currently are held by the custodian and which contain personal data, must be surrendered to DiaMedica. Surrendering the documents would entail processing personal data which is subject to certain limitations under the General Data Protection Regulation (GDPR).^[9]

4.14.

DiaMedica argues that the GDPR only applies to data that do not reveal the identity or personal health of the participants in the trial (the ‘Participants’) by using subject codes or ID numbers.

4.15.

The Court disagrees. The GDPR applies to any information relating to an identified or identifiable natural person. An ‘identifiable natural person’ is anyone who can be identified, directly or indirectly, in particular by reference to an identifier such as a name or an identification number.^[10]Both the identification number and the name and other data of the Participant connected to that number are in the possession of PRA, and can therefore easily be used to identify the person participating in the trial.^[11]This means that only where the Documents do not contain the Participants’ names, ID numbers or other reference to a particular Participant, are the data not subject to the GDPR.

4.16.

Next, the Court needs to determine who is the controller of the personal data and who is the processor, as a data transfer between these two entities may not fall within the scope of the GDPR. Under Article 4(8) GDPR ‘processor’ means ‘a natural or legal person, public authority, agency or other body which processes personal data on behalf of the controller’.

4.17.

The GDPR Guidelines provide more insight into the requirements for acting ‘on behalf of the controller’.

The nature of the service will determine whether the processing activity amounts to processing of personal data on behalf of the controller within the meaning of the GDPR. In practice, where the provided service is not specifically targeted at processing personal data or where such processing does not constitute a key element of the service, the service provider may be in a position to independently determine the purposes and means of that processing which is required in order to provide the service.^[12]

4.18.

The processing of personal data of the Participants under the Agreement is not a key element of the services provided by PRA under the Agreement. The services are to conduct clinical trials in connection with DiaMedica’s pharmaceutical product known as DM-199. In the process of performing these services, PRA needs to collect personal data of the persons participating in the trial, but that is not the main purpose of the Agreement. Therefore, PRA does not meet the requirement of a ‘processor’, and must be considered a ‘controller’ under the GDPR. In fact, DiaMedica and PRA qualify as ‘joint controllers’ under Article 26 of the GDPR. Under the Agreement, PRA was the party responsible for preparing the Protocol (see page 32 of the Agreement). DiaMedica determined the project specifications, including a description of the Protocol (Article 2.1(a) and Appendix B of the Agreement), and could request changes to the Protocol (Article 2.2(a)(ix) of the Agreement).^[13]

4.19.

Each disclosure of personal data by a controller requires a lawful basis and assessment of compatibility regardless of whether the recipient is a separate controller or a joint controller. In other words, the existence of a joint controller relationship does not automatically mean that the joint controller receiving the data can also lawfully process the data for additional purposes which are beyond the scope of joint control.^[14]The current objective for processing personal data by surrendering documents to DiaMedica is to ensure the accuracy of the results of the clinical trials and to advance the development of DiaMedica’s medicine. In the Court’s opinion, this makes the processing of the Participants’ personal data necessary for the purposes of the legitimate interests pursued by the controller (DiaMedica), which outweigh the Participants’ right to privacy, as they willingly participated in the clinical trials and were aware that their health data would be processed and recorded as part of the trials (Article 6(1)(f) GDPR). The processing of any health data is necessary for scientific research purposes (Article 9(2)(j) GDPR and Article 24 UAVG).^[15]

4.20.

However, surrendering the Documents containing personal data to DiaMedica would qualify as a transfer to a third country under Chapter V of the GDPR, as DiaMedica has its corporate seat in Canada and has its principal place of business in the US. Transfers between joint controllers fall within the concept of transfer within Chapter V.^[16]Such transfer is only allowed where the European Commission has decided that the third country in question ensures an adequate level of protection (Article 45 of the GDPR) or where the controller or processor has provided appropriate safeguards (Article 46 of the GDPR).

4.21.

DiaMedica argues that Article 45 applies here, as its registered office is in Canada and the European Commission allows free data flow to Canada pursuant to its 2001 decision.^[17]

4.22.

The Court disagrees. Under Article 1 of this EC decision Canada is considered as providing an adequate level of protection for personal data transferred from the Community to “recipients subject to the Personal Information Protection and Electronic Documents Act (‘the Canadian Act’)”. Recital 5 of the decision provides that the Canadian Act extends to “every organisation that collects, uses or discloses personal information in the course of a commercial activity”. DiaMedica has not presented any evidence that its registered office in Canada actually was the recipient of any of the personal data shared in the past by PRA, nor that it is DiaMedica’s intention in these proceedings to have this office receive any documents. The writ of summons was brought before this Court on behalf of DiaMedica’s office in Minneapolis, U.S., and therefore any claims for surrendering documents to the claimant entail transferring the documents to the U.S. Currently, there is no (valid) EC decision on data exchange with the US (see the
Schrems IIruling by the ECJ).^[18]The EU-U.S. Data Privacy Framework announced on 25 March 2022 by European Commission President Von der Leyen has not yet resulted in a new adequacy decision.^[19]

4.23.

The
Schrems IIruling also casts doubt as to the current adequacy of data protection in the U.S. The Parties did not provide the Court with any information on this point. As health data require a higher level of protection than other personal data (Article 9 GDPR), the Court is not satisfied that protection can be guaranteed by providing safeguards. As a consequence the relevant personal data are to remain within the European Union for the time being. Therefore, the Court will order DiaMedica to designate a representative within the European Union under Article 27 GDPR. For practical purposes, as the personal data are currently in the custody of a Dutch custodian, DiaMedica may designate its Dutch counsel as its representative in this respect. The custodian is to determine which data are personal data (which may only be transferred to the representative) and which data are not personal data (which may be sent to DiaMedica’s Minneapolis office).

iii) Which data are within the scope of the definition of Data under the Agreement?

4.24.

PRA argues that the definition of “Documents” used by DiaMedica in its claims in these proceedings, and in the leave for attachment, is too broad. The definition of Data under Article 9.0 is more limited. It does not include:

Source Documents,
Software and other documents and data generally used by PRA and not developed solely for the Sponsor,
the Investigator File.

4.25.

The interpretation of the Agreement is governed by New York State law (see para. 4.5). The fundamental rule of New York State law contract interpretation is that agreements are construed in accord with the parties' intent, and "[t]he best evidence of what parties to a written agreement intend is what they say in their writing." Thus, a written agreement that is clear and unambiguous on its face must be enforced according to the plain meaning of its terms, and extrinsic evidence of the parties' intent may be considered only if the agreement is ambiguous. A contract is ambiguous if the provisions in controversy are reasonably or fairly susceptible of different interpretations or may have two or more different meanings. The existence of ambiguity is determined by examining the "entire contract and consider[ing] the relation of the parties and the circumstances under which it was executed," with the wording to be considered "in the light of the obligation as a whole and the intention of the parties as manifested thereby. Whether a contract is ambiguous presents a question of law for resolution by the court."^[20]All parts of an agreement are to be reconciled, if possible, in order to avoid inconsistency. Thus, "where two seemingly conflicting contract provisions reasonably can be reconciled, a court is required to do so and to give both effect."^[21]

Documents

4.26.

DiaMedica’s definition of “Documents” is “certain data generated at DiaMedica’s behest”^[22]and “everything generated in the course and context of the clinical trial performed by PRA for DiaMedica”.^[23]The Court finds that this is not broader than the definition of “Data” in Article 9.0 of the Agreement. Article 9.0 clearly states:

“
All data (including without limitation, written, printed, graphic, video and audio material, and information contained in any computer database or computer readable form) generated by PRA in the course of conducting the Services (the “Data”) and related to the Services will be Sponsor’s property.”

The plain meaning of “all data generated by PRA” is “everything generated by PRA”. The “Services” to be conducted by PRA were to perform a study to “evaluate the safety, tolerability, pharmacokinetics, pharmacodynamics and proof of concept of DM-199”.^[24]

4.27.

This means that only those data are outside the scope of the definition of “Data” where other provisions of the Agreement say so. The Court will now assess whether – as argued by PRA – the Source Documents, Software and Investigator File are excluded from the scope of this definition.

Source Documents

4.28.

The Court finds that the Agreement is not ambiguous as to the property rights in the Source Data. “All data” means “all data”. This in principle includes raw data collected and Source Documents generated by PRA, which are at the core of the clinical trials process.

4.29.

The Court agrees with PRA that the “Services” provided by PRA are also determined by the Protocol,^[25]and its contents are therefore relevant in the construction of the Agreement. However, the Court disagrees with PRA where it argues that the articles in the Protocol^[26]on access (Article 3.7) and documentation (Article 5.2) require the “Data” in Article 9.0 of the Agreement to be interpreted as not pertaining to Source Data. DiaMedica’s property right under the Agreement does not preclude PRA from keeping the documents generated in the course of the study, including source data, under its control during the clinical trials or in its own archives after completion of the study (Article 5.2.1 of the Protocol). In fact, Article 10.3 of the Agreement entitles PRA to retain copies of the Data at the termination of the Agreement.^[27]

4.30.

In the Court’s opinion, PRA’s references in its statement of defence to several provisions of the “ICH topic E6 Guideline for Good Clinical Practice (“GCP”)” are irrelevant for the interpretation of the scope of Article 9.0 of the Agreement. The mere reference in Article 2.1(b) of the Agreement to the GCP is insufficient to bring its provisions into the contract, as “All Services to be provided must be set forth in the Agreement” (Article 2.0). Furthermore the circumstance that the GCP contains articles providing for PRA to make source data or source documents available to Diamedica does not mean that the Parties have therefore not provided for Diamedica to be the owner of such information. The one does not exclude the other.

4.31.

The above leads to the conclusion that Source Data are included in the definition of “Data” under Article 9.0 of the Agreement.

Investigator File

4.32.

PRA argues that the Investigator File contains only internal organisational notes regarding the logistics and staffing of the clinical trial, intended for PRA’s internal administrative purposes. In its view:

the information contained in the Investigator File cannot be considered "Data" within the meaning of the Agreement;
the Investigator File is unnecessary for DiaMedica to reconstruct or audit the clinical trial;
DiaMedica cannot claim ownership of the physical copies of the Investigator File secured in PRA’s archives for its own records; and
any disclosure or transfer of personal data to DiaMedica must be done by PRA in a manner compliant with the GDPR and UAVG.

4.33.

The Court disagrees with PRA on the issue of the ownership of the Investigator File. Under the Agreement only the following data are excluded from the scope of DiaMedica’s property right:

“analytical methods, computer technical expertise and software, which have been independently developed by PRA (…), except to the extent that improvements or modifications include, incorporate or are based upon Sponsor’s information.” (Article 9.0)
“all business processes, contract terms, prices procedures, policies, methodologies, systems, computer programs, software, applications, databases, proposals and other documentation generally used by PRA and not developed solely for Sponsor (…), along with any improvement, alteration or enhancement made thereto during the course of the Services(…)” (Article 10.2)

4.34.

The documents in the Investigator File do not fall within the scope of either category. The Investigator File was created specifically for the DM-199 clinical trials to be conducted by PRA for DiaMedica. Whether obtaining these documents is necessary for DiaMedica’s reconstruction of the trials is irrelevant. Where a property right exists, no further interest is required in exercising it. As follows from paragraph 4.29, DiaMedica’s property right does not preclude PRA from having copies of the Investigator File. The personal data referred to by PRA above consist of personal information about PRA’s staff. Under Article 6(1)(f) GDPR obtaining these data is necessary for the purposes of the legitimate interests of DiaMedica in order to assess which persons of PRA’s staff were involved in conducting the study. These interests clearly outweigh the interests of PRA’s staff members.

Software and other data generally used by PRA and not developed solely for DiaMedica

4.35.

Articles 9.0 and 10.2 of the Agreement are clear when it comes to Software and other documents and digital data generally used by PRA and not developed solely for Diamedica: Software and other documents and data “will remain the sole and exclusive property of PRA, except to the extent that improvements or modifications include, incorporate or are based upon Sponsor’s information.” Where the Digital Data include software or other documents and data generally used by PRA and not developed solely for Diamedica as defined in the Agreement (except to the extent that improvements or modifications have been made which include, incorporate or are based on DiaMedica’s information), they are outside of the scope of DiaMedica’s property rights.

iv) Which Party was owner of the Physical Documents at the moment of creation?

4.36.

PRA states that it became the owner of the Physical Documents at the moment of creation pursuant to Article 5:16(1) DCC. This Article provides that if a person creates a new thing out of one or more other movable things, this thing is owned by the owner of the original things. PRA’s position is that it provided the ink and paper to create something new, the Physical Documents, and therefore instantly became the owner of these new things upon creation.

4.37.

DiaMedica invokes Article 5:16(2) DCC, which assigns ownership to the person who has such a thing created wholly or partially out of one or more movable things not belonging to the person.

4.38.

The Court finds that the applicability of Article 5:16(1) or (2) DCC is not decisive for the current ownership of the Physical Documents. Even if PRA became the owner under Article 5:16(1) DCC, the Agreement prescribes instant transferral of ownership to DiaMedica. Under Dutch law, property is transferred by delivery pursuant to a valid title by the person who has the right to dispose of the property (Article 3:83 DCC). Delivery is made by giving possession of the thing to the acquirer (Article 3:90 DCC). This need not be actual delivery. A bilateral declaration without further action is sufficient for the transfer of possession where the alienator possesses the thing and henceforth holds it for the acquirer by virtue of a stipulation made at the time of delivery (Article 3:115(a) DCC). The stipulation need not be express. It may be inferred from statements made or actions taken by the parties.^[28]

4.39.

This is the case here. Under Article 9.0 of the Agreement all data generated by PRA in the course of conducting the Services and related to the Services “will be” the property of DiaMedica. The Court does not agree with PRA that the use of the future tense in this provision indicates that ownership requires actual delivery in the future. At the time of signing the Agreement, PRA had not started providing (the essential part of) its services, except for some services which may have been provided under the Letter of Intent (which were deemed to have been performed under the Agreement, Article 2.0 of the Agreement). This explains the use of the future tense in Article 9.0. Especially when Article 9.0 is read in conjunction with Article 10.3 the Parties’ intentions are clear. Under Article 10.3, PRA is required to “return” the data collected during the performance of its services to DiaMedica. This phrasing only makes sense if DiaMedica was already the possessor (
bezitter) of the Physical Documents (which means PRA was merely the holder (
houder) during the performance of the Services). This is further evidenced by DiaMedica allowing PRA to “retain” a copy of the data at the termination of the Agreement (Article 10.3).

4.40.

In conclusion, DiaMedica is currently, and was during the performance of the Services by PRA, the owner of the Physical Documents.

Conclusions on the ownership of the Documents

4.41.

The above leads to the following conclusions on the ownership of the Documents:

DiaMedica is the owner of the Physical Documents;
DiaMedica is currently not the owner of the Digital Data, but there is a contractual obligation for PRA to cooperate in DiaMedica becoming the owner of the Digital Data except where it pertains to PRA’s software and other data referred to in paragraph 4.33 of this judgment.

B) May PRA retain the Physical Documents or suspend its obligation to surrender these documents?

4.42.

PRA argues that it may retain the Physical Documents, or suspend any obligation it may have to surrender these documents, until DiaMedica has fulfilled its payment obligations towards PRA.

4.43.

These questions of law are governed by the laws of New York State (see para. 4.5 of this judgment).

4.44.

The Court will first deal with the question of the existence of a right of retention. Under Article 8 paragraph 180 of the New York Consolidated Lien Law:

“a person who (…) performs work or services of any nature and description upon, or in any way enhances the value of an article of personal property, at the request or with the consent of the owner, has a lien on such article, while lawfully in possession thereof, for his reasonable charges for the work done and materials furnished, and may retain possession thereof until such charges are paid.”

4.45.

The Agreement includes a payment schedule for the Services provided by PRA, which specifies the manner and timing of all payments (Article 2.1(f) of the Agreement and Appendix E to the Agreement). Pursuant to Appendix E, a percentage of all costs for the study are due and payable upon the completion of certain milestones (Article 1.0(g)). The Court considers this to be a contractual framework for assessing what would be a “reasonable charge for the work done” at certain stages of the Services provided by PRA.

4.46.

PRA does not dispute that DiaMedica fulfilled all its payment obligations except the final instalment, which is due “upon Submission of the Final Report” (see Appendix E). PRA has not yet submitted its Final Report to DiaMedica, as this is dependent on DiaMedica approving the Draft Report. DiaMedica has not done so, as PRA denied its request to surrender the Documents.

4.47.

PRA argues that, as the Agreement does not specify a term or moment for PRA to surrender the Documents, the Final Report is similarly due upon completion of the Parties’ mutual obligations, thus including payment for the Final Report.

4.48.

The Court disagrees. Under Article 2.1(c)(i) of the Agreement the approval of each Milestone (as defined) is ‘in the sole discretion of Sponsor’. This means DiaMedica can make its approval of the Draft Report dependent on receiving documents and data it deems necessary to approve or not to approve. The fact that DiaMedica approved the datalocks on the data does not deprive it of its right to ask for surrender of the data for assessing the Draft Report. After the datalocks the data were unblinded, which may result in additional questions regarding the way these data were collected by PRA. The Court therefore finds that PRA has no lien on the Documents.

4.49.

Equally, PRA does not have a right to suspend its obligation to surrender the Physical Documents to DiaMedica. DiaMedica is not in breach of any obligation under the Agreement, nor is there any basis to permit a suspension by PRA now in anticipation of a potential future failure to pay the final invoice after receiving the Documents and approving the Draft Report.

Conclusions as to DiaMedica’s revindication claims

4.50.

The above leads to the conclusion that PRA is under an obligation to surrender the Physical Documents and the Digital Data (except the data referred to in para. 4.33 of this judgment) to DiaMedica. The fact that PRA may have provided DiaMedica access to or a copy of some or all of these documents and data in the past, does not mean that DiaMedica has no interest in obtaining these documents and data at this point in time. An owner is not required to prove an interest in revindicating its property.

4.51.

What remains is the question of how PRA needs to fulfil this obligation in light of:

PRA’s argument that the bailiff, in enforcing the leave for attachment, attached more documents and data than fall within the scope of DiaMedica’s property right;
the Participants’ right to privacy that needs to be protected in any transfer of documents containing personal data.

4.52.

As the Court ruled in paragraph 4.23 any Physical Documents or Digital Data containing personal data must - in the interest of protecting the Participants’ privacy - be surrendered to DiaMedica’s representative in the European Union.

4.53.

Where the Physical Documents attached by the bailiff are Source Documents or documents included in the Investigator File, these must be surrendered to DiaMedica (see paras 4.31 and 4.34 above). PRA has not denied that all other files in the attached 51 hardcopy folders are “Data” under the Agreement and therefore these also need to be surrendered to DiaMedica.

4.54.

As to other digital files attached by the bailiff, PRA argues that it is unable to prepare a proper defence because the bailiff failed to specify in his record which data were attached. In its view, these data will - at the very least - consist of Source Data and Software.

4.55.

As the Court ruled in para 4.31 of this judgment, Source Data are within the definition of “Data” under the Agreement, and Software and other documents and data generally used by PRA and not developed solely for DiaMedica, are not. Therefore, these data that fall outside the definition need to be returned to PRA. The custodian, the Court anticipates, should be capable of making this assessment.

4.56.

As to PRA’s argument that it does not know which digital files are attached by the bailiff, the Court rules as follows. Under Article 734 in conjunction with Articles 712 and 443 DCCP, the bailiff is required to provide the attachee (and the custodian) with an accurate description of the attached goods. DiaMedica failed to present evidence that the bailiff did so. The bailiff’s record is too vague on this point. Therefore, the Court accepts PRA’s position that it was unable to prepare a proper defence on this issue. This means that it is up to the custodian to provide a description of the files and select the digital files that are within the scope of the definition of “Data” under Article 9.0 of the Agreement. The Parties are ordered to assist the custodian by providing a list of keywords or file names that meet this definition.

4.57.

The findings of this Court result in the following decisions on DiaMedica’s revindication claims:

the declaration requested that DiaMedica is the rightful owner of the Documents will be limited to only the Physical Documents;
the order for PRA to allow and tolerate that DiaMedica exercises its rights as owner of the Documents will be limited in the same manner;
the order for PRA to cooperate with the surrender of the Documents, including the data carrier with the Digital Data, by the judicial custodian to DiaMedica will be awarded under the following conditions:

o any Digital Data outside of the scope of DiaMedica’s property right (see para 4.33), are to be returned to PRA; the custodian is to provide a description of the attached digital files to the Parties and the Parties – under the guidance of their counsel - are to assist the custodian in the selection process by providing a list of keywords or file names that meet the definition of “Data”;

o any Physical Document or Digital Data containing personal data of the Participants in the clinical trial are to be surrendered only to a representative in the European Union designated by DiaMedica under Article 27 GDPR.

4.58.

The Court will not impose a penalty for violations of the orders made in this judgment. As the Physical Documents and Digital Data are in the custody of the custodian appointed by a court, the Court is sufficiently satisfied that these orders will be complied with at this stage, and the Court can order any appropriate relief that might be required at a later stage as needed.

4.59.

There is no need to allow PRA to file an interlocutory appeal against this judgment because PRA is authorised to appeal without permission from this Court for the following reasons. This judgment is not a decision on case management or a decision preparing the case for trial, but it goes to the heart of the dispute between the parties and gives a final decision on certain claims.^[29]It serves not merely to provide DiaMedica with documents that may substantiate the grounds for its damages claim against PRA, but also to assist DiaMedica in ensuring the accuracy of the results of the clinical trials and to move forward with the development of its medicine. Moreover, DiaMedica needs this judgment to convert the prejudgment attachment on the Documents for the purpose of surrender into an executory attachment,^[30]and to have the custodian release the Documents to the party entitled to receive the Documents.^[31]

4.60.

The Court will not declare that the judgment will be enforceable notwithstanding any remedy. Any action to enforce the judgment might, as a practical matter, result in an irreversible consequence, as the documents might have been surrendered to a party not domiciled in the European Union. It would be costly and time-consuming for PRA to retrieve the Documents from DiaMedica if a higher court were to give a different ruling on one or more of the various complex issues in this case. Moreover, DiaMedica has been litigating the merits of this case since 2017 in various US courts. Since the judgment of the District Court of the Northern Netherlands (19 May 2021), referring the case to this Court, it took DiaMedica 1.5 years to issue a notice for continuation of the case. In the Court’s opinion this does not show DiaMedica has a sufficiently urgent interest in pursuing this matter at this stage, pending a potential appeal. Therefore, PRA’s interests in maintaining the current status quo outweigh DiaMedica’s interest in enforcing this judgment immediately, pending a potential appeal.

4.61.

Under Article 706 DCCP the costs of levying an attachment may be claimed, in

the main action or otherwise, from the attachee, except where the attachment was invalid, unnecessary or unlawful. The findings of this Court clearly show that the exception does not apply here. DiaMedica is entitled to the surrender of attached data. The attachment is not unnecessary, as PRA denied and still denies DiaMedica having any property rights in most of the attached data. Therefore, it was necessary for DiaMedica to attach the data for the purpose of revindicating the data. The Court will award DiaMedica’s reimbursement claim, but only to the extent these costs pertain to the attachment for the purpose of revindication. These costs are estimated at EUR 1,430.53 for the various writs served by the bailiff and EUR 2,000 in lawyers’ fees (EUR 4,000 x 1 application x 50%).

4.62.

In accordance with the timetable set at the case management conference, the Court will direct DiaMedica to submit its amended/additional grounds for the remaining claims on 14 June 2023.

5.Decisions

THE COURT:

In the original action

5.1.

declares (
verklaart voor recht) that DiaMedica is the rightful owner of the Physical Documents,

5.2.

orders PRA to allow and tolerate (
gehengen en gedogen) that DiaMedica exercises its rights as owner of the Physical Documents and to cooperate with the surrender of the Physical Documents, including the data carrier with the Digital Data, by the judicial custodian to DiaMedica under the following conditions:

o any Physical Document or Digital Data containing personal data of the Participants are to be surrendered only to a representative in the European Union designated by DiaMedica under Article 27 GDPR,

5.3.

orders PRA to reimburse DiaMedica for the costs of the Attachment, estimated at EUR 3,430.53,

5.4.

directs DiaMedica to submit its amended/additional grounds for the remaining claims on 14 June 2023.

Done by C.W.D. Bom, L.S. Frakes and A.C. Bordes, Judges, assisted by W.A. Visser, Clerk of the court.

Issued in public on 21 April 2023.

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